Market News

Mia Gindis and Jacob Wendler

(Bloomberg) -- Oil slipped as broader market weakness and concerns about a global glut of crude overshadowed escalating tensions in the Middle East.

West Texas Intermediate fell 1% to settle below $67 a barrel, snapping a two-session winning streak. US equities weakened a day ahead of a Federal Reserve decision set to provide clarity on the economic effects of ongoing trade wars. Oil earlier rose as much as 1.7% after Israel conducted military strikes across Gaza, while the US increases pressure on Iran.

“Crude has been pricing in only a minimal geopolitical risk premium as tensions between Israel and Hamas resurface,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “Most traders view the premiums as selling opportunities, positioning for inventory builds later in the year and increasing macroeconomic risks.”

Crude is on track for a quarterly loss as an escalating global trade war threatens demand while OPEC and its allies are set to raise production starting in April. The global market was already set for a glut, according to the International Energy Agency.

Russian President Vladimir Putin agreed in a phone call with US President Donald Trump to limit attacks on Ukrainian energy assets, but stopped short of committing to a broader 30-day ceasefire.

Still, some market participants have been quick to hedge against a pickup in geopolitical risk. Premiums on bearish put options declined relative to bullish calls on Monday, and the day’s trading was dominated by a flurry of $100-a-barrel wagers.